July 08, 2015

Shelby Opening Statement on the Role of the FSB in the U.S. Regulatory Framework

WASHINGTON, DC – Wednesday, July 8, 2015 – U.S. Senator Richard Shelby (R-Ala.), Chairman of the United States Senate Committee on Banking, Housing, and Urban Affairs, today delivered opening remarks during a full committee hearing on “The Role of the Financial Stability Board in the U.S. Regulatory Framework.”
The text of Chairman Shelby’s remarks, as prepared, is below.  
“Today, the Committee will examine the role of the Financial Stability Board, or the FSB, in our domestic regulatory framework.
“The FSB is an international body that monitors and makes recommendations about the global financial system.  It was established in April 2009 by the G20.
“Most of the members of the FSB are political appointees and banking regulators.  The three U.S. regulators who are members of the FSB are the Treasury, the Federal Reserve, and the SEC.
“As I mentioned at a Banking Committee hearing on the FSOC in March, the FSB is not a U.S. regulator, and it is not accountable to Congress or the American people.
“At this same hearing, when asked about whether the FSB has the power to designate U.S. firms as systemically risky, Secretary Lew acknowledged that ‘the FSB cannot designate a firm for us.’
“And yet, Secretary Lew could not recall any particular instance in which the FSOC had deviated from the FSB.
“Furthermore, two out of the three insurance companies that the FSOC has designated were first designated by the FSB.
“The question is whether FSB designations have become a substitute for the independent judgment of our regulators.  And, if they have, what do we know about the FSB’s designation process.
“The U.S. regulatory process should be open and transparent, and should encourage public participation in the rulemaking process.
“Because the FSB process is opaque and devoid of public participation, very little is known about the specifics of its deliberations.
“There remains much uncertainty regarding how a consensus is reached, and the degree to which U.S. regulators are involved in FSB decision making.
“Ultimately, the FSB process should not allow U.S. regulators to avoid our own rulemaking process or Congressional oversight.
“In past hearings we have heard from the Treasury, the Fed, and insurance experts, among others, about the interplay between the FSB and the FSOC. 
“Today, this Committee will receive testimony from those affected by the FSB process as well as experts who have studied and analyzed the FSB and its impact on U.S. companies.”